• AUM grew 28% YoY to Rs 2.52 lakh crores excluding Motor Finance (20% YoY to Rs 2.77 lakh crores including Motor Finance), exceeding guidance of 18-20%
• Disbursements crossed Rs 50,000 crores for the first time in company history, growing 32% YoY in Q4
• Asset quality showed strongest improvement in recent quarters - slippages at 8-quarter lows, with personal loans and microfinance slippages declining 60-70% respectively
• Housing Finance Company delivered 29% YoY growth with AUM of Rs 86,653 crores and PAT growth of 34% YoY in Q4
• Motor Finance achieved breakeven in Q3 and Rs 43 crores PAT in Q4, with disbursements growing 32% sequentially
• Operating efficiency improved with cost-to-income ratio at 38.3% for FY26, down 35 bps YoY, within guided range of 38-39%
• AI initiatives showing tangible results - underwriting assist platform reduced credit memo preparation time from 2 days to 20 minutes, improving productivity by 30%
• Distribution network expanded to 1,477 branches across 27 states serving 8.4 million customers

Tata Capital delivered a strong Q4 FY26 performance, exceeding guidance across all metrics with PAT growth of 36% YoY (excluding Motor Finance) and ROA improving to 2.5%. The company demonstrated significant asset quality improvement with slippages at 8-quarter lows, credit costs declining to 0.8%, and strong momentum in high-yielding retail segments. Management expressed confidence in achieving FY28 guidance despite monitoring geopolitical risks, citing technology-driven efficiency gains, improving Motor Finance business, and strong capital position.

Tata Capital reported strong financial performance for Q4 FY26. Excluding Motor Finance, PAT grew 51% YoY and 14% sequentially to Rs 1,562 crores (excluding non-recurring items), exceeding the guided range of 32-35% for the full year with actual growth of 36%. Return on Assets improved 40 bps YoY and 20 bps QoQ to 2.5%, at the higher end of guidance. ROE improved 40 bps YoY to 14.6% in Q4. For the full year FY26, ROA improved 20 bps to 2.2%. Including Motor Finance, PAT grew 16% sequentially to Rs 1,502 crores with ROA improving 20 bps QoQ to 2.3% and ROE improving 80 bps to 13.9%. Credit costs improved significantly to 0.8% (excluding Motor Finance) and 0.9% (including Motor Finance), down 20-30 bps from Q3. Cost of funds stood at 7.1%, down 5 bps from Q3. Net Stage 3 assets improved to 0.5% (excluding Motor Finance) and 0.9% (including Motor Finance) with provision coverage ratio at 65.1% and 56.2% respectively. The company maintains strong capital adequacy at 19% with debt-to-equity ratio of 5.3x and liquidity buffer of Rs 29,500 crores.

Management demonstrated high confidence in the business trajectory and ability to achieve FY28 guidance. CEO Rajeev Sabharwal emphasized that FY26 reflected 'disciplined execution and strong fundamentals across growth, asset quality and profitability.' Management highlighted five key themes: balanced book growth across segments/products/geographies, strongest asset quality performance in recent quarters, stable cost of funds management, healthy margin corridor with room for improvement, and structural operating leverage from technology investments. The tone was particularly positive on technology initiatives, with detailed examples of AI-driven productivity improvements (85% adoption rate of underwriting assist platform, 30% improvement in EMI collection through AI-driven early bucket calling). Management emphasized a 'fitness first approach' for Motor Finance while expressing optimism about its turnaround trajectory. Regarding macro concerns, management acknowledged monitoring geopolitical developments closely (weekly reviews) but reported no material stress observed in the portfolio, with April bounce rates actually declining versus Q4. The consistent reference to exceeding guidance and operating at the 'higher end' of targets reflected strong execution confidence.

The primary challenges facing Tata Capital include the uncertain external environment driven by geopolitical developments, particularly the continuing conflict in West Asia and its implications for inflation, energy prices, and global financial conditions. Management noted potential impacts from evolving El Niño conditions on food inflation and rural demand. While no material stress has been observed yet, management expressed caution regarding potential impacts on commercial vehicle and MSME segments from tariff wars and rising input costs. Some subsegments within MSME (hotels, travel-related) have already seen tightened underwriting norms. The company faced headwinds from higher incremental borrowing costs observed in March, though these showed signs of easing. Intense competition in the housing finance market led to high balance transfer (BT) pressures, particularly impacting prime home loan growth which was only 16% versus 21%+ for prime LAP and higher rates for affordable/micro housing. The Motor Finance business, while improving, still requires another 1-2 quarters to demonstrate sustained positive AUM growth and faces challenges reaching the 2% ROA target by FY28. Mark-to-market impacts on private equity investments affected non-interest income in Q4 due to stock market declines in March. The unsecured portfolio, while showing improvement, requires continued monitoring given industry-wide concerns about this segment.

Revenue Outlook: AUM growth guidance of 23-25% for FY27 (excluding Motor Finance), building on 28% growth achieved in FY26

Margin Outlook: NIM expected to improve in FY27 from FY26 levels driven by product mix (higher growth in unsecured, motor finance, affordable housing); Cost of funds expected to be lower in FY27 than FY26

Key Targets:

• FY28: ROA of 2.5-2.7% (currently at 2.2% for FY26)
• FY28: Cost-to-income ratio of 33-34% (currently at 38.3%)
• FY28: Credit costs to remain sub-1% (currently at 1.2% for FY26 including Motor Finance)
• Motor Finance: ROA target of 2% by FY28 with positive AUM growth resuming from FY27
• Unsecured retail to scale from current 10.3% to 15% of AUM
• Housing Finance: Continue 29% YoY growth trajectory; Cost-to-income below 30% (achieved in Q4 at 31.1% for full year)
• Retail and SME mix to inch up from current 86% of AUM

The Q&A session revealed analyst focus on three main areas: (1) sustainability of asset quality improvement and credit cost trajectory, (2) ability to achieve FY28 ROA guidance of 2.5-2.7%, and (3) impact of geopolitical developments on portfolio quality. Analysts were particularly interested in the Motor Finance turnaround, NIM trajectory given competing pressures of rate cuts and product mix, and reconciling strong guidance with macro uncertainties. Management responded confidently, providing detailed breakdowns of ROA bridge to FY28 targets, emphasizing the temporary nature of certain headwinds (BT pressures, mature book repayments limiting visible growth), and highlighting leading indicators (April bounce rates down, no stress in ground-level portfolio reviews). There was significant discussion on housing finance growth strategy, with management clarifying focus on affordable/near-prime/micro segments rather than competing at 7.25% rates in prime. Technology and AI initiatives received attention, with management providing specific metrics on productivity gains. Overall, management maintained a confident, data-driven tone while acknowledging need for caution in select segments, successfully addressing concerns about macro risks with evidence of proactive monitoring and early action (tightening underwriting in specific MSME subsegments). The most contentious area was reconciling lower yields with higher ROA guidance, which management addressed through daily average vs two-point average calculations and product mix arguments.